Economics of Marine Pollution

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Large overloads of nutrients are one of many stresses on coastal and marine ecosystems and there is a need for policies that reduce nutrient emissions. This thesis contributes to the knowledge about policy design for marine pollutants. All applications are made to nutrient emissions to the Baltic Sea, but the concepts and issues are likely to be relevant also for the management of other regional seas. Three of the included studies analyze cost-effective policies for reduced eutrophication. In the fourth study, game theory is used to analyze countries' choice of abatement level when abatement costs are uncertain. Two major messages emerge from the thesis. The first message concerns the current de facto policy in the Baltic Sea region, where uniform reduction rates are applied for nutrients and countries. Abandoning these uniform reduction rates can save costs. If uniform reductions for countries or nutrients are replaced by cost-effective reductions, then, in either case, more abatement is called for in the countries in transition. This, in turn, might require international institutions that can distribute the costs of abatement among all countries in Baltic Sea region. The second message is that uncertainty is of importance for policy design. Firstly, nutrient loads to coastal waters are stochastic and if peak loads cause high environmental damage, then, in order to reduce total abatement cost, abatement efforts should be particularly high at sources and in regions where abatement leads to large reductions in load variations. Secondly, unilateral abatement, that is undertaken in one country with a purpose to reduce uncertainty about abatement costs and thereby encourage another country to follow, might lead to larger emissions in total and lower utility in both countries.

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